TECHNOLOGY; PMC-Sierra And Conexant Will Cut Jobs

Conexant Systems and PMC-Sierra said today that they planned to dismiss hundreds of workers and that sales this quarter would lag behind already reduced forecasts because demand for communications chips was falling.

Conexant, of Newport Beach, Calif., said it was eliminating 1,500 jobs and 125 contract employees, about 20 percent of its work force. PMC-Sierra, based in Santa Clara, Calif., will dismiss 230 employees, or 13 percent of its staff.

The sales decline will cause a wider-than-expected loss at Conexant and lower profit at PMC-Sierra.

The job cuts are among the first announced this year by specialized chip equipment makers that supply Internet equipment vendors like Cisco Systems. These specialty manufacturers are trimming expenses because Internet and telecommunications equipment makers are buying fewer chips. ''Now you know in bad times what can happen,'' said Venu Reddy of Waddell & Reed Financial, which owns shares of PMC-Sierra and a rival, Broadcom.

Conexant also plans to trim senior managers' pay by 10 percent. And the company canceled plans for an initial public offering of its Mindspeed Technologies unit, which makes chips that speed Internet traffic. The already battered shares of Conexant dropped 63 cents today to $10.50. PMC-Sierra, precviously hard hit, fell $1.68 to $32.26.

Conexant, which makes chips for network and fiber optic equipment as well as PC modems and mobile phones, said second-quarter sales would fall 35 to 40 percent from the first quarter's $410.4 million. Sales a year earlier were $501.7 million.

The per-share loss will be 35 to 40 cents, excluding one-time charges and some costs. Conexant was expected to lose 24 cents, according to analysts polled by First Call/Thomson Financial.

PMC-Sierra, which competes with Conexant in networking chips, said first-quarter profit before acquisition costs and restructuring charges would be 2 to 3 cents a share. The analysts had expected profit of 12 cents. It estimated revenue at $118 million to $120 million. In January, PMC-Sierra forecast first-quarter sales of $160 million to $170 million.